Oxford Technology 3 VCT plc : Half-year Report

Oxford Technology 3 Venture Capital Trust Plc

Unaudited Half-Yearly Report

For the period

1 March 2017 to 31 August 2017

Financial Headlines

Company Number: 4351474 Registered Address: The Magdalen Centre, Oxford Science Park, Oxford OX4 4GA

Statement on behalf of the Board

I am pleased to present the unaudited results for the six month period ended 31 August 2017.

Results and Dividends The Company's net asset value (NAV) per share has decreased from 82.5p at 28 February 2017 by 0.9p to 81.6p at 31 August 2017.  The underlying NAV per share rose by 3.1p but was offset by the payment of a 4p per share dividend on 21 July 2017. Further dividends are likely to require a profitable investee company exit.

Portfolio Review The companies within the portfolio continue to develop, and where required and permitted under VCT rules your company continues to invest to support that development.  During the period, additional investments were made into Immbio (£31k), Plasma Antennas (£50k) and Scancell (£50k). 

Following a successful first in human clinical trial, Immbio is now negotiating commercial licences for its Pneumococcal Vaccine Pnubiovax. Plasma Antennas continues to develop its unique technology while looking for commercial partners. Scancell has a strong novel cancer related clinical development pipeline. SCIB1, targeting malignant melanoma, has had good Phase1/2 results and a Phase 2 combination trial with an immune checkpoint inhibitor is planned for 2018.  SCIB2 targets non-small lung cancer and Modi-1 targets breast and ovarian cancers and osteosarcoma. Four Phase1/2 trials on each target are also planned for 2018.

Another of the listed companies within the portfolio Abzena raised money within the period by way of a placing at 33p per share. Your company did not participate in the placing. 

The directors have reviewed the valuation of each investee company in the unquoted portfolio.  Changes have been made to a number of valuations to reflect company performance primarily Ixaris and Glide Pharmaceutical. Ixaris has continued to grow sales significantly and generate cash. As a result, our loan of £108k along with accrued interest of £79k will be repaid shortly after period end. On a negative note Glide went into administration after the period end after both the two previous major investors refused to put up further funds or renegotiate their preference shares leading to your company having to write off the remaining £48k of investment.

The Directors along with the Investment Advisor continue to take an active interest in the remaining companies within the portfolio, both to support their management teams to achieve company development, but also to prepare companies for realisation at the appropriate time. It should be noted that the current portfolio is highly concentrated with Ixaris representing 58% and Scancell 15% of investments and the VCT NAV is very sensitive to changes in these valuations.

Liquidity At period end we had net current assets of £711k which continues to provide us with flexibility to make follow-on investments if attractive.

VCT qualifying status The Board has procedures in place to ensure that the Company continues to comply with the conditions laid down by HMRC for maintaining approval as a VCT.

Presentation of half-yearly report In order to reduce the length of this report, we have omitted details of the Company's objectives and investment strategy, its Advisers and Registrar and how to buy and sell shares in the Company. These details are all included in the Annual Reports, which together with previous half-yearly reports, are available for viewing on the Oxford Technology website.

Outlook Your directors continue to monitor changes to VCT legislation, and its potential impact on both the VCT and its investee companies. The recent publication of the Patient Capital Review makes many recommendations regarding investment into early stage high growth companies. It is expected that this may drive additional changes to tax efficient investment schemes. Your directors do not expect that this will have any material impact on the current portfolios or on current investors as the VCT is fully invested. Likewise, whilst the impact of Brexit remains unclear, your directors do not expect its eventual outcome to have a material impact on portfolio valuations.

We were pleased to welcome a large number of shareholders to our AGM in July. Two of our investee companies made presentations: Arecor and Immbio. These presentations are on the Oxford Technology website.

The directors' view remains that the portfolio, while concentrated, still holds significant potential over the medium term but is not without risk. Finally I would like to take this opportunity to thank shareholders for their continued support.

Robin Goodfellow - Chairman 20 October 2017

Investment Portfolio as at 31 August 2017

Responsibility Statement of the Directors in respect of the half-yearly report

We confirm that to the best of our knowledge:

• the half-yearly financial statements have been prepared in accordance with the statement "Interim Financial Reporting" issued by the Financial Reporting Council;

• the half-yearly report includes a fair review of the information required by the Financial Services Authority Disclosure and Transparency Rules, being:

• an indication of the important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements.
• a description of the principal risks and uncertainties for the remaining six months of the year.
• a description of related party transactions that have taken place in the first six months of the current financial year that may have materially affected the financial position or performance of the Company during that period and any changes in the related party transactions described in the last annual report that could do so.

On behalf of the Board:

Robin Goodfellow - Chairman 20 October 2017

Income Statement

• The 'Total' column of this statement is the profit and loss account of the Company; the supplementary Revenue return and Capital return columns have been prepared under guidance published by the Association of Investment Companies.
• All revenue and capital items in the above statement derive from continuing operations.
• The accompanying notes are an integral part of the half-yearly report.
• The Company has only one class of business and derives its income from investments made in shares and securities and from bank and money market funds.

The Company has no recognised gains or losses other than the results for the period as set out above. Accordingly, a Statement of Comprehensive Income is not required.

Balance Sheet

* At fair value through profit and loss

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Half-Yearly Report

1.         Basis of preparation The unaudited half-yearly results which cover the six months to 31 August 2017 have been prepared in accordance with the Financial Reporting Council's (FRC) Financial Reporting Standard 104 Interim Financial Reporting ('FRS 104') and the Statement of Recommended Practice (SORP) for Investment Companies re-issued by the Association of Investment Companies in November 2014. Details of the accounting policies and valuation methodologies are included in the Annual Report.

2.         Publication of non-statutory accounts The unaudited half-yearly results for the six months ended 31 August 2017 do not constitute statutory accounts within the meaning of Section 415 of the Companies Act 2006. The comparative figures for the year ended 28 February 2017 have been extracted from the audited financial statements for that year, which have been delivered to the Registrar of Companies. The independent auditor's report on those financial statements, in accordance with chapter 3, part 16 of the Companies Act 2006, was unqualified. This half-yearly report has not been reviewed by the Company's auditor.

3.         Earnings per share The calculation of earnings per share for the period is based on the return attributable to shareholders divided by the weighted average number of shares in issue during the period. There are no potentially dilutive capital instruments in issue and, therefore, no diluted returns per share figures are relevant.

4.         Net asset value per share The net asset value per share is based on the net assets at the period end divided by the number of shares in issue at that date (6,785,233 in each case).

5.         Principal risks and uncertainties The Company's assets consist of equity and fixed interest investments, cash and liquid resources. Its principal risks are therefore market risk, credit risk and liquidity risk. Other risks faced by the Company include economic, loss of approval as a Venture Capital Trust, investment and strategic, regulatory, reputational, operational and financial risks. These risks, and the way in which they are managed, are described in more detail in the Company's Annual Report and Accounts for the year ended 28 February 2017. The Company's principal risks and uncertainties have not changed materially since the date of that report.

6.         Related party transactions OT3 Managers Ltd, a wholly owned subsidiary, provides investment management services to the Company for a fee of 1% of net assets per annum.

7.          Copies of this statement are available from Oxford Technology Management, The Magdalen Centre, Oxford Science Park, Oxford OX4 4GA and on the Company's website - www.oxfordtechnology.com /vct3.

Board Directors : Robin Goodfellow, Richard Roth, Alex Starling and David Livesley

Investment Manager : OT3 Managers Ltd with services contracted to Oxford Technology Management Ltd

Website: www.oxfordtechnology.com/vct3

Enquiries: Lucius Cary, Oxford Technology Management 01865 784466